Currency Ban, Liquidity Crisis Leads To Risk Of Economic Slowdown In India
Indian Prime Minister Narendra Modi is now facing risk of economic slowdown as well as political backlash with his move to ban the two biggest denomination currency notes.
Initially the ban, announced on November 8, was hailed as a game-changer that would check tax evasion and corruption too.
Currently, even after more than a week of the ban, people in hundreds and thousands are standing in long queues at ATMs and banks to get cash or exchange old notes for new ones across the country rather than working.
This has affected small businesses, real estate, gold and the informal sectors too.
Finance Minister Arun Jaitley said the situation may not change son and would take about three weeks to replace the old notes.
Meanwhile, Modi urged to the nation over the weekend to give him fifty days to weed out ill-gotten wealth in India.
India’s Gross Domestic Product (GDP) grew 7.6 percent last financial year and in the quarter ended June this it dropped to 7.1 percent.
The currency ban move and crisis of liquidity temporarily may have negative impact on the GDP, data of which is due on November 30.